Embattled crypto lender Celsius Network has revealed its plans to start repaying its customers by the end of the year. The announcement came during a court proceeding for the company’s reorganization plan on October 2. Celsius’ legal counsel, Christopher Koenig, informed the court that the new company, called NewCo, will have $450 million in seed funding. The lender intends to partially repay its creditors with $2.03 billion worth of Bitcoin and Ethereum, as well as shares in NewCo. Fahrenheit LLC, a consortium, has already provided backing for NewCo and will manage the mining and staking business of the company.
However, the restructuring plan still needs approval from securities regulators in the US. While the majority of creditors have approved the plan, there are some who are not in favor of it. Celsius stated that the plan has the support of over 95% of voting account holders by both number and dollar amount. The judge overseeing the case, Martin Glenn, is currently reviewing the plan.
Celsius Network filed for bankruptcy over a year ago and has faced scrutiny from security regulators. The US Federal Trade Commission recently imposed a $4.7 billion fine on the company for misusing user deposits. Furthermore, Celsius founder Alex Mashinsky pleaded not guilty to fraud charges filed against him by the US Department of Justice.
If approved, Celsius would be one of the first failed crypto platforms from last year to be revived after filing for Chapter 11 bankruptcy. The company suspended withdrawals in June 2022 following the collapse of the Terra/Luna project, leaving investors waiting to access their funds.
It remains to be seen whether the court and securities regulators will approve Celsius’ restructuring plan. If successful, the repayment of customers by the end of the year would provide some relief for those affected by the lender’s previous financial troubles. The outcome of this case will likely have implications for the wider crypto lending industry and set a precedent for handling bankruptcies in the sector.
As the legal process continues, Celsius faces an uphill battle to regain trust and rebuild its reputation. The fate of the company, its creditors, and its customers hangs in the balance.
